Water resource development on rivers significantly affects life cycles of species reliant on wetlands. However, assessing ecological impacts is often difficult because they are realised over long-time periods and large spatial scales, particularly on highly variable dryland rivers. Thirty percent of all Ramsar wetlands are in drylands. We examined the effects of diversions of water upstream on colonial waterbird breeding at the Narran Lakes, supplied by a highly variable dryland river. Narran Lakes is an important Ramsar-listed wetland in Australia for its provision of habitat for wetland fauna during key life history stages, including colonially breeding waterbirds. We use historical ibis breeding data over five decades (1970–2016) to determine the flow requirements for colonial waterbird breeding and modelled the impacts of water resource management options (current and restoration) on breeding. We identified thresholds (> 154,000 ML in 90 days with a secondary threshold of > 20,000 ML in the first 10 days) of river flow volume necessary to stimulate breeding. Water resource development reduced the frequency of large flows resulting in ibis breeding by 170%, from 1 in 4.2 years to 1 in 11.4 years. Restoration efforts by government to recover water for the environment was predicted to improve colonial waterbird breeding frequency associated with large flow events to 1 in 6.71 years, representing a 59% reduction from pre-development periods. Our framework has global application as a method for identifying long-term impacts of water resource development on key Ramsar wetland areas. This is important, as few mechanisms exist for assessing impacts and identifying restoration options on the listed criteria for many Ramsar wetlands.